<PAGE>   1
 
================================================================================
 
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON D.C. 20549
 
                               ------------------
 
                                   FORM 10-K
 
<TABLE>
<S>               <S>
   (MARK ONE)
      [X]         ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                  SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED, EFFECTIVE
                  OCTOBER 7, 1996)
                  FOR THE FISCAL YEAR ENDED MARCH 31, 1997

                                               OR

      [  ]        TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                  THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
                  FOR THE TRANSITION PERIOD FROM ________TO________
</TABLE>
 
                         COMMISSION FILE NUMBER 1-11112
 
                        AMERICAN MEDIA OPERATIONS, INC.
           (Exact name of the registrant as specified in its charter)
 
<TABLE>
<S>                                            <C>
                  DELAWARE                                      59-2094424
       (State or other jurisdiction of                         (IRS Employee
       incorporation or organization)                       Identification No.)

   600 EAST COAST AVENUE, LANTANA, FLORIDA                      33464-0002
  (Address of principal executive offices)                      (Zip Code)
</TABLE>
 
      Registrant's telephone number, including area code:  (561) 540-1000
 
          Securities registered pursuant to Section 12(b) of the Act:
                   11.625% SENIOR SUBORDINATED NOTES DUE 2004
 
          Securities registered pursuant to Section 12(g) of the Act:
                                      NONE
 
     American Media Operations, Inc. (1) HAS FILED all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months, and (2) HAS BEEN subject to such filing requirements for
the past 90 days.
 
     The aggregate market value of the voting stock held by non-affiliates as of
June 17, 1997 was $0.
 
     As of June 17, 1997 there were issued and outstanding 7,507.6 shares of the
registrant's common stock, $.20 par value, all of which were held, beneficially
and of record, by American Media, Inc.
 
     American Media Operations, Inc. meets the conditions set forth under
General Instruction J(1)(a) and (b) and is therefore filing this Form with
reduced disclosure.
 
================================================================================
<PAGE>   2
 
                                     PART I
 
ITEM 1.  BUSINESS
 
GENERAL
 
     American Media Operations, Inc. ("Operations") operates through its
subsidiaries (together, the "Company") as a leading publisher in the field of
personality journalism. The Company publishes National Enquirer, Star, Weekly
World News, Soap Opera Magazine, Country Weekly and Soap Opera News, with a
current aggregate weekly circulation in excess of 6 million copies. National
Enquirer and Star have the second and third largest single copy circulation,
respectively, of any weekly periodical. The Company derives over 86% of its
revenues from circulation, predominantly single copy sales in supermarkets and
other retail outlets, and the remainder from advertising and other sources.
Operations' subsidiary, Distribution Services, Inc. ("DSI"), markets the
Company's periodicals, as well as those of its client publishers, in
approximately 175,000 locations in the United States and Canada, representing,
in the opinion of management, virtually complete coverage of traditional
periodical distribution outlets. In addition, DSI provides merchandising and
information gathering services for non-publisher third parties.
 
     The Company's management strategy is to enhance revenues by raising the
cover prices of its publications, expanding advertising sales, introducing new
products and making acquisitions while at the same time reducing costs through
measures such as increasing printing and distribution efficiencies and
consolidating support functions. Consistent with this strategy, in fiscal 1997
the Company increased the cover prices of several of its publications, launched
a new weekly publication, Soap Opera News, and acquired a controlling interest
in Frontline Marketing, Inc. ("Frontline") an in-store advertising company.
 
     The Company has explored and continues to explore other selected
acquisition opportunities in areas related to its existing businesses. Any
significant acquisitions would be subject to the covenants contained in the
credit agreement dated November 10, 1994 among the Company, certain banks named
therein (the "Banks") including The Chase Manhattan Bank, as Agent bank, (as
amended from time to time, the "Credit Agreement") and indenture (the
"Indenture") relating to the Company's 11 5/8% Senior Subordinated Notes due
2004. See Notes 5 and 6 of Notes to Consolidated Financial Statements.
 
     The Company's business also includes licensing of its trademarks and
copyrighted materials for television and video programming as well as
syndicating its published material. The registered trademarks owned by the
Company include "National Enquirer", a "Star" design, "Weekly World News", "Soap
Opera Magazine", "Country Weekly" and "The Untold Story", and the Company has
pending trademarks for "Enquiring Minds" and "Enquiring Minds Want to Know",
among others. The Company considers its trademarks important to its business.
 
     Operations was incorporated under the laws of Delaware in February 1981 and
is a wholly-owned subsidiary of American Media, Inc., ("Media"). The Company
conducts all of Media's operations and represents substantially all of Media's
assets. The Company's headquarters and principal executive offices are located
at 600 East Coast Avenue, Lantana, Florida 33464-0002 and the telephone number
is (561) 540-1000.
 
THE PUBLICATIONS
 
     The Company currently publishes six weekly periodicals:
 
          National Enquirer, whose predecessors date back to 1926, is a general
     interest, tabloid format periodical with an editorial content devoted to
     celebrity features, human interest stories and service articles covering
     topics such as health, food and household affairs.
 
          Star, which commenced publication in 1974, is a celebrity news-driven
     periodical with a strong emphasis on news of television performers and the
     lives of the rich and famous. Star complements this focus with human
     interest stories of ordinary people thrust into the limelight by
     extraordinary circumstances. Every issue also includes a variety of service
     features, such as food, fashion, health, fitness and parenting.
 
                                        1
<PAGE>   3
 
          WEEKLY WORLD NEWS, which commenced publication in 1979, is a black and
     white tabloid devoted to entertaining and unusual stories. The editorial
     content of Weekly World News is derived principally from rewritten stories
     and purchased photographs from agencies and periodicals around the world.
 
          SOAP OPERA MAGAZINE, which commenced publication in 1991, provides
     in-depth coverage of the ten network daytime soap opera programs including
     summaries of current story lines, exclusive interviews and extensive photo
     coverage of soap opera stars.
 
          COUNTRY WEEKLY, launched in April 1994, presents all aspects of
     country music, lifestyles, events and personalities.
 
          SOAP OPERA NEWS, the Company's newest magazine having been launched in
     March 1997, is a digest-sized publication covering all aspects of daytime
     television's soap opera programming including news, features and behind the
     scene stories about the shows and stars.
 
     The following table provides information reflecting a typical weekly issue
for each of the publications:
 
<TABLE>
<CAPTION>
                                                                      NEWSSTAND PRICE
                                                                          PER COPY           FULL PRICE
                           NUMBER OF    NUMBER OF                  ----------------------   SUBSCRIPTION
                             PAGES     COLOR PAGES   % EDITORIAL   UNITED STATES   CANADA    $ PER COPY
                           ---------   -----------   -----------   -------------   ------   ------------
<S>                        <C>         <C>           <C>           <C>             <C>      <C>
National Enquirer........      48           30           70%           $1.39       $1.69       $0.92
Star.....................      48           30           78             1.39        1.69        0.92
Weekly World News........      48        n/a             76             1.25        1.35        0.67
Soap Opera Magazine......      52           52           86             1.59        1.89        0.92
Country Weekly...........      60           60           86             1.69        1.99        0.89
Soap Opera News..........     132          132           95             1.49        1.79        1.30
</TABLE>
 
     Each of the publications, excluding Soap Opera News, periodically publishes
expanded issues in place of its regular weekly issue. Depending on the
publication, expanded issues typically include 24 to 32 additional pages with
domestic cover prices of $2.49 for National Enquirer, Star, Soap Opera Magazine
and Country Weekly and $1.95 for Weekly World News. Expanded issues may include
an additional focus on particular topics of interest such as fashion, horoscope,
artist awards, important celebrities and unusual occurrences in addition to the
standard editorial content of a regular weekly issue.
 
     Also, on certain occasions special issues are published by National
Enquirer and Star in addition to their regular weekly issues. Special issues,
which are kept on sale for periods of two to three weeks, are typically 76 pages
in length and have a domestic cover price of $2.50. Similar to an expanded
issue, a special issue focuses on a particular topic of interest to its readers;
however it excludes the editorial features normally found in either an expanded
issue or a regular weekly issue. The Company plans to publish 24 expanded issues
in fiscal 1998 and may offer special issues should opportunities arise. A table
showing the number of expanded and special issues for the past three fiscal
years follows:
 
<TABLE>
<CAPTION>
                                              1997                 1996                 1995
                                       ------------------   ------------------   ------------------
                                       EXPANDED   SPECIAL   EXPANDED   SPECIAL   EXPANDED   SPECIAL
                                       --------   -------   --------   -------   --------   -------
<S>                                    <C>        <C>       <C>        <C>       <C>        <C>
National Enquirer....................     4          --       --           2       --           2
Star.................................     4          --        1           1       --           3
Weekly World News....................     5         n/a        3         n/a        1         n/a
Soap Opera Magazine..................     4         n/a        1         n/a        1         n/a
Country Weekly.......................     4         n/a        4         n/a        1         n/a
</TABLE>
 
     In fiscal 1996, the Company also began publishing pocket-sized books under
the name Micro Mags which cover such topics as diets, horoscopes, health and
psychic phenomena, among others. The current cover price of the Micro Mags is
$1.39. The Company plans to publish 8 releases in fiscal 1998, each with 4
titles.
 
OVERSEAS DISTRIBUTION AND FOREIGN OPERATIONS
 
     The Company distributes both weekly and special issues of National Enquirer
and Weekly World News in the United Kingdom, Europe and, to a minor extent,
Asia. For fiscal 1997, combined average weekly
 
                                        2
<PAGE>   4
 
foreign circulation (excluding Canada) was approximately 137,000 copies as
compared to 122,000 in fiscal 1996. The revenues, operating profit and
identifiable assets attributable to those markets are not material for any of
the last three fiscal years.
 
EDITORIAL
 
     The editorial departments of the publications are independent operating
entities and have different reporting structures. The editorial groups for
NATIONAL ENQUIRER, WEEKLY WORLD NEWS and COUNTRY WEEKLY are based in Lantana,
Florida, while editorial offices for STAR, SOAP OPERA MAGAZINE and SOAP OPERA
NEWS are based in Tarrytown, New York.
 
     The editorial news gathering operations of NATIONAL ENQUIRER are conducted
by 6 article editors who, together with their staff reporters in Lantana and Los
Angeles, are responsible for developing stories. Under the supervision of an
Editor, Executive Editor and Managing Editor, the stories flow from the articles
editors to the writers and layout desks. A separate photo department is
responsible for obtaining the pictures to be placed in the publication.
 
     The full time staff of approximately 70 is complemented by a network of
more than 1,000 freelance reporters and other contributors who serve as story
idea sources, information sources, reporters and photographers. Stories are
rewritten in NATIONAL ENQUIRER style by a highly skilled team of writers. In
addition, NATIONAL ENQUIRER has a separate research department consisting of
eight employees, whose function is to provide fact checking for stories and to
assist the editorial staff with original research.
 
     STAR'S reporters, based in Los Angeles, Washington and New York and on
assignment, report to a central news editor who is flanked by a photo editor
with a worldwide network of photographers. The news and photo desks channel
stories and pictures to the Executive Editor and the Editor-in-Chief, who decide
on direction, scale and placement, and then brief the production team,
consisting of the art desk and the copy desk.
 
     STAR'S editorial staff consists of approximately 60 full-time employees and
a freelance and editorial contributor network of approximately 150 persons. Fact
checking for Star is accomplished by the editorial desks and a separate library
staff assists with research for various stories.
 
     The editorial staffs of WEEKLY WORLD NEWS, SOAP OPERA MAGAZINE, COUNTRY
WEEKLY AND SOAP OPERA NEWS are comprised of approximately 16, 20, 25 and 26
persons, respectively, managed by each publication's editor.
 
     Each of the Company's publications uses graphic display computers to
configure story layouts while editors determine the final text and perform a
last review for accuracy. Once finalized, the completed issues are digitally
transmitted to printing plants for printing.
 
     In addition to its editorial staff, each publication pays outside sources
for story ideas, for information regarding "breaking stories" that is proved to
be genuine and for exclusive stories regarding celebrities. The Company also
pays free-lance photographers and free-lance reporters for their investigative
journalism.
 
     Multiple sources as well as documentation are sought for all stories that
are potentially controversial or subject to dispute. In addition, the Company
retains special libel counsel to review, prior to publication, all sensitive
stories and celebrity news and photos. Before publishing book excerpts, the
Company generally obtains indemnification from the publisher, author and/or
agent concerning publication rights and defamation.
 
CIRCULATION
 
     The Company's publications derive a major portion of their revenues from
circulation, as opposed to advertising. More than 86% of the Company's
consolidated revenue for fiscal 1997 was derived from circulation. Approximately
85% of its circulation revenue was generated by single copy sales and the
remainder by subscriptions.
 
     CIRCULATION STRATEGY AND PRICING.  The Company's strategy is to optimize
circulation revenues and operating cash flow, as opposed to the unit sales of
its publications. The Company believes that the single copy
 
                                        3
<PAGE>   5
 
and subscription sales of its publications are not materially sensitive to
moderate, periodic price increases, and that there is flexibility to increase
both the cover and subscription prices. This belief is based on the
price/circulation history of the publications and the pricing history of
competing publications relative to the pricing history of the Company's titles.
 
     CIRCULATION TRENDS.  The following table sets forth average weekly single
copy and total unit sales of the Company's publications (excluding special
issues) for the past three fiscal years (in thousands):
 
<TABLE>
<CAPTION>
                                               1997             1996             1995
                                          --------------   --------------   --------------
                                          SINGLE           SINGLE           SINGLE
                                           COPY    TOTAL    COPY    TOTAL    COPY    TOTAL
                                          ------   -----   ------   -----   ------   -----
<S>                                       <C>      <C>     <C>      <C>     <C>      <C>
National Enquirer.......................  2,104    2,543   2,150    2,604   2,512    2,993
Star....................................  1,858    2,212   2,025    2,397   2,268    2,672
Weekly World News.......................    409      431     438      459     490      510
Soap Opera Magazine.....................    268      330     240      284     272      310
Country Weekly..........................    219      389     215      333     225      290
</TABLE>
 
     Canadian sales during fiscal 1997 represented less than 10% of each
publication's average weekly unit sales.
 
     Management believes declines in single copy circulation of NATIONAL
ENQUIRER, STAR and WEEKLY WORLD NEWS resulted in part from increased competition
from other publications and forms of media such as television and radio programs
concentrating more heavily on celebrity news. See "Competition". In addition, a
portion of such declines are due to the Company's strategy of optimizing
circulation revenues and operating cash flows as opposed to maximizing unit
sales.
 
     All of the Company's publications are sold with full return privileges.
Copies not sold are returned to the wholesalers for destruction. The Company
periodically audits the return procedures of its wholesalers.
 
SUBSCRIPTIONS
 
     Consistent with its strategy with respect to single copy circulation the
Company's strategy with respect to subscriptions seeks to optimize subscription
revenues and profitability as opposed to subscription unit sales. The Company
accomplishes this strategy by focusing primarily on direct-to-publisher
subscriptions, however, it also offers agency-sold discounted subscriptions when
it believes that such sales will result in economically beneficial levels of
full-price renewal subscriptions. All of the Company's publications except
WEEKLY WORLD NEWS offer agency-sold subscriptions.
 
     Subscription copies are delivered as second class mail. Subscription
fulfillment is performed by an unaffiliated company which charges a fee for its
services.
 
     Renewal rates for the Company's publications (exclusive of subscriptions
sold by direct mail agents) were 80% for NATIONAL ENQUIRER, 79% for STAR, 64%
for WEEKLY WORLD NEWS, 64% for SOAP OPERA MAGAZINE and 63% for COUNTRY WEEKLY
for subscriptions which expired during the first six months of the 1996 calendar
year. Average weekly subscription unit sales for the past three fiscal years
were as follows (in thousands):
 
<TABLE>
<CAPTION>
                                                              1997    1996    1995
                                                              ----    ----    ----
<S>                                                           <C>     <C>     <C>
National Enquirer...........................................  439     454     481
Star........................................................  354     372     404
Weekly World News...........................................   22      21      20
Soap Opera Magazine.........................................   62      44      38
Country Weekly..............................................  170     118      65
</TABLE>
 
     Subscription unit sales declines for NATIONAL ENQUIRER and STAR are
attributable to the same competitive factors as previously described for single
copy unit sales declines.
 
                                        4
<PAGE>   6
 
     Each of the Company's publications sells both paid-in-advance and billed
subscriptions for 52-week periods. Subscriptions of 16 to 26 weeks, depending
upon the publication, are also available. Renewals are promoted through a series
of mailings and, in some cases, a telephone call to the subscriber. In addition,
subscriptions may be promoted through ads in sister publications.
 
ADVERTISING REVENUES
 
     The Company maintains advertising sales offices in New York City, Chicago,
Los Angeles and Lantana that solicit advertisements for its publications. The
following table shows advertising revenues generated by publication for the past
three fiscal years (in millions):
 
<TABLE>
<CAPTION>
                                                              1997     1996     1995
                                                              -----    -----    -----
<S>                                                           <C>      <C>      <C>
National Enquirer...........................................  $13.5    $13.0    $14.9
Star........................................................    7.6      7.8     10.0
Weekly World News...........................................    1.4      1.2      1.2
Soap Opera Magazine.........................................    0.5      0.4      0.2
Country Weekly..............................................    1.3      0.9      0.7
                                                              -----    -----    -----
                                                              $24.3    $23.3    $27.0
                                                              =====    =====    =====
</TABLE>
 
     The following table sets forth advertising revenues by category and as a
percent of total advertising revenues for the past five fiscal years (dollars in
millions):
 
<TABLE>
<CAPTION>
                                             TOTAL       NATIONAL      MAIL ORDER     CLASSIFIED
                                          ADVERTISING   -----------    -----------    ----------
                                            REVENUE       $      %       $      %      $      %
                                          -----------   -----   ---    -----   ---    ----   ---
<S>                                       <C>           <C>     <C>    <C>     <C>    <C>    <C>
1997....................................     $24.3      $ 9.9   41%    $11.1   46%    $3.3   14%
1996....................................      23.3        8.9   38      11.1   48      3.3   14
1995....................................      27.0        8.9   33      15.0   56      3.1   11
1994....................................      25.9        9.0   35      13.8   53      3.1   12
1993....................................      29.4       11.1   38      14.6   50      3.7   12
</TABLE>
 
     Management believes that the decline in advertising revenues since 1993
reflects a combination of factors including, increased competition for
advertising revenues from other forms of media concentrating on celebrity news
such as television and radio and the effects of decreased circulation levels of
NATIONAL ENQUIRER and STAR.
 
     Tobacco advertising revenues totaled approximately $4.1 million in fiscal
1997 as compared to approximately $5.3 million in fiscal 1993. Management
believes that tobacco advertising as a percentage of national advertising
revenue may continue to decline.
 
MARKETING, MERCHANDISING AND INFORMATION GATHERING SERVICES
 
     DSI, consisting of more than 170 full time and 1,440 part time personnel,
is responsible for marketing the Company's publications, as well as those of its
client publishers, in racks at checkout counters in over 175,000 locations in
the United States and Canada. DSI covers virtually all traditional periodical
distribution outlets. Management believes that DSI's national coverage and
marketing skills are one of the key factors that contribute significantly to
sales of the Company's publications.
 
     Each week, the staff of DSI are routed to review product positions and
reposition and restock racks of its clients at the checkout counters in more
than 18,000 of the highest volume supermarkets, mass merchandisers and other
retail outlets in the United States and Canada. DSI also coordinates or
"quarterbacks" the design of rack displays in consultation with retailers and
publishers, for approximately 40% of all checkout racks programs initiated
annually in the United States and Canada. Although DSI receives no monetary
compensation for serving as quarterback, it competes with other companies to
serve as quarterback. Coordinating the design and magazine placement of racks
enables the Company to obtain favorable positions for its publications which
management believes is important in determining its sales volume. Publishers who
 
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<PAGE>   7
 
are allocated space on a rack enter into contracts directly with the store owner
for the payment of retail display allowances or other charges with respect to
that space. Currently, the Company has more than $18 million invested in racks.
 
     DSI has contractual agreements to provide various marketing services to
third-party clients in the publishing industry, including Hachette Filipacchi
Magazines, Inc., which publishes WOMAN'S DAY, WOMAN'S DAY SPECIALS, ELLE, and
MIRABELLA; Hearst Magazines, which publishes COSMOPOLITAN, GOOD HOUSEKEEPING,
REDBOOK, COUNTRY LIVING, HARPER'S BAZAAR, HOUSE BEAUTIFUL AND VICTORIA;
Gruner + Jahr USA/Publishing, which publishes MCCALLS, FAMILY CIRCLE, FITNESS,
PARENTS AND YM; Wenner Media, Inc., which publishes US MAGAZINE and ROLLING
STONE MAGAZINE; Rodale Press, Inc., which publishes PREVENTION and QUICK &
HEALTHY COOKING; and Newsweek, Inc., which publishes NEWSWEEK.
 
     DSI has expanded its client base beyond the publishing industry by
providing merchandising and information gathering services to various major
packaged-products companies, retailers and other marketers. DSI has equipped its
field force with hand-held computer terminals in order to enhance the timeliness
and accuracy of its information gathering services. Management believes DSI has
significant potential for further expansion.
 
     In September 1996, the Company acquired an 80% interest in Frontline an
in-store advertising company for approximately $2.2 million in cash. Frontline
sells advertising space to various product manufacturers and other national
advertisers on signage it owns at the checkout counters in about 5,200 grocery
stores and considers itself as a premier in-store advertising vehicle for new
products and front-end brands. Frontline is responsible for maintaining the
signage consisting of an elevated light display and pays the retailer a
commission on advertising sales. DSI performs Frontline's field service work and
Company management believes there may be additional benefits from offering
Frontline's in-store advertising in combination with national advertising sales
in the Company's publications.
 
PRODUCTION AND RAW MATERIALS
 
     An unrelated third party performs most of the prepress operations for the
Company's publications and is responsible for transmitting them electronically
to independent printing plants. All of the publications are printed utilizing
the rotogravure printing process. The Company has a long-term printing agreement
with an unrelated domestic printer to print NATIONAL ENQUIRER and STAR through
December 2010. See Note 8 of Notes to Consolidated Financial Statements. This
same printer also prints all of the Company's other publications except for
NATIONAL ENQUIRER'S United Kingdom edition and SOAP OPERA NEWS which are printed
by other unrelated printers. Once printed, the copies are transported by truck
to over 200 wholesalers in the United States and Canada who deliver the
requisite number of copies to more than 175,000 retail sales locations. The
Company believes its relationships with its printing companies are favorable and
that there are printing facilities available elsewhere, should the need arise.
The following table reflects the average weekly press run for the Company's
publications during fiscal 1997 (in thousands):
 
<TABLE>
<CAPTION>
                                                                 AVERAGE
                                                                PRESS RUN
                                                              --------------
<S>                                                           <C>
National Enquirer...........................................      4,919
Star........................................................      4,461
Weekly World News...........................................      1,125
Soap Opera Magazine.........................................        811
Country Weekly..............................................        878
</TABLE>
 
     The principal raw materials utilized by the Company's publications are
paper and ink. Paper is purchased directly by the Company from several suppliers
based upon pricing and, to a lesser extent, availability. Ink utilized by the
Company's publications is supplied by the printers from at least two different
ink suppliers. Both paper and ink are commodity products with pricing affected
by demand, capacity and economic conditions. The Company believes that adequate
sources of supply are, and will continue to be, available to fulfill its
requirements.
 
                                        6
<PAGE>   8
 
     Since 1994, the interplay of worldwide demand for paper products and
manufacturing capacity at paper mills has resulted in relatively significant
paper price volatility for the Company, as well as other publishers. In response
to these rising costs, the Company undertook several measures to reduce paper
consumption including lowering the print orders of its publications and reducing
both the number of pages and trim sizes of certain of its publications. These
efforts combined with changes in paper demand and availability has resulted in a
substantial decline in the Company's average paper costs during fiscal 1997.
Although it is not possible to accurately forecast the future prices of paper,
Company management believes prices in fiscal 1998 will likely be lower than the
levels experienced in fiscal 1997.
 
COMPETITION
 
     All of the Company's publications compete in varying degrees with other
publications focusing on personality journalism and those sold at retail
checkout counters, as well as other forms of media concentrating on celebrity
news, including daily newspapers and television and radio programs. The Company
believes that its most direct competitors are Time Warner, Inc. (which publishes
PEOPLE and ENTERTAINMENT WEEKLY), Wenner Media, Inc. (which publishes US
MAGAZINE), News America Publishing Incorporated (which publishes TV GUIDE),
Globe Communications Corp. (which publishes GLOBE, SUN and NATIONAL EXAMINER),
K-III Magazine Corporation (which publishes SOAP OPERA DIGEST and SOAP OPERA
WEEKLY), Bauer Publishing (which publishes SOAP OPERA UPDATE and SOAPS IN DEPTH)
and Meredith Corp. (which publishes COUNTRY AMERICA). Competition for
circulation is largely based upon the content of the publication, its placement
in supermarkets and other retail outlets and, to a lesser extent, its price.
Competition for advertising dollars is largely based upon circulation levels,
readership, demographics, price and advertiser results. DSI competes with many
other companies at various marketing and distribution levels, such as full-
service national distributors, wholesalers, and publishers who have their own
marketing organizations. Many of the Company's competitors have substantially
larger operating staffs and greater capital resources than the Company.
 
EMPLOYEE RELATIONS
 
     The Company employs approximately 530 persons full-time and 1,500
part-time, of whom about 1,600 work for DSI. None of the Company's employees is
represented by any union or other labor organization. There have been no strikes
or work stoppages against the Company during the last five years. The Company
believes that its relations with its employees are good.
 
ITEM 2.  PROPERTIES
 
     The Company owns its headquarters buildings which are located in Lantana,
Florida. The premises, which also houses the editorial staffs of NATIONAL
ENQUIRER, WEEKLY WORLD NEWS and COUNTRY WEEKLY, consist of three one-story
buildings with an aggregate of 33,700 square feet located on approximately 7.6
acres.
 
     The Company also leases 18,800 square feet in Tarrytown, New York for the
editorial staffs of STAR, SOAP OPERA MAGAZINE and SOAP OPERA NEWS and 7,700
square feet in West Palm Beach, Florida for DSI. Various other smaller
properties are leased primarily in New York and California for certain of the
Company's other operations. The Company believes that all of its properties are
in generally good condition and are adequate for current operations.
 
     All Company owned property is subject to a mortgage as security to the
Banks under the Credit Agreement.
 
ITEM 3.  LEGAL PROCEEDINGS
 
     The Company is involved in a number of litigation matters which have arisen
in the ordinary course of business. Although the plaintiffs in some of the
Company's legal proceedings are alleging damages in excess of 10% of the
Company's current assets, the Company does not believe that these lawsuits are
material, either singly or in the aggregate. Because the focus of the Company's
publications on personality journalism often involves controversial celebrities
or subjects, the risk of libel litigation arises in the ordinary course of the
 
                                        7
<PAGE>   9
 
Company's business. In addition, the Company's experience suggests that the
claims for damages made in such lawsuits are heavily inflated and, in any event,
any reasonably foreseeable liability or settlement in excess of policy
deductibles would be covered by insurance. At May 8, 1997, the Company was a
defendant in 7 libel-based lawsuits. In the opinion of the Company, the outcome
of these proceedings will not have a material adverse impact on the Company's
consolidated financial position or results of operations. During the five fiscal
years ended March 31, 1997, the Company paid approximately $20.7 million in the
aggregate for legal fees (including prepublication review and litigation), libel
insurance premiums and libel-related settlements, including amounts covered by
insurance payments. See "Business -- Editorial". The Company has not experienced
any difficulty obtaining libel insurance and does not expect to experience any
material difficulty in the future.
 
                                        8
<PAGE>   10
 
                                    PART II
 
ITEM 5.  MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER
         MATTERS
 
     All of the Company's common stock is owned by Media. For the two fiscal
years ended March 31, 1997, the Company has paid no cash dividends to Media and
will pay no cash dividends on its common stock in the foreseeable future.
Instead, it will use cash generated from operating results primarily to make
principal and interest payments on its indebtedness. In addition, the payment of
future cash dividends is restricted under the terms of its indebtedness,
particularly the Credit Agreement, which limits aggregate dividend payments and
requires the maintenance of certain financial ratios including operating cash
flow and debt coverage ratios.
 
ITEM 6.  SELECTED FINANCIAL DATA
 
     The selected financial data for each of the five fiscal years in the period
ended March 31, 1997 below have been derived from the consolidated financial
statements of the Company, which have been audited by independent certified
public accountants. The following selected financial data should be read in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations", the Company's Consolidated Financial Statements and
Notes thereto and other financial information appearing elsewhere in this Form
10-K.
 
<TABLE>
<CAPTION>
                                                                  FISCAL YEAR ENDED
                                              ---------------------------------------------------------
                                              MARCH 31,   MARCH 25,   MARCH 27,   MARCH 28,   MARCH 29,
                                               1997(1)      1996        1995        1994        1993
                                              ---------   ---------   ---------   ---------   ---------
                                                                   (IN THOUSANDS)
<S>                                           <C>         <C>         <C>         <C>         <C>
STATEMENT OF INCOME DATA:
Operating Revenues..........................  $315,988    $295,050    $315,299    $300,035    $275,384
Operating Expenses(2).......................   228,817     228,714     230,401     213,651     201,238
                                              --------    --------    --------    --------    --------
Operating Income............................    87,171      66,336      84,898      86,384      74,146
Interest Expense............................   (56,284)    (56,715)    (35,885)    (28,721)    (32,777)
Other Expense, Net..........................    (1,705)     (1,195)     (1,409)     (3,164)     (1,467)
                                              --------    --------    --------    --------    --------
Income before Income Taxes and Extraordinary
  Charge....................................    29,182       8,426      47,604      54,499      39,902
Income Taxes................................    16,716       8,985      23,755      26,269      19,886
                                              --------    --------    --------    --------    --------
Income (Loss) before Extraordinary Charge...    12,466        (559)     23,849      28,230      20,016
Extraordinary Charge(3).....................        --          --     (11,635)         --          --
                                              --------    --------    --------    --------    --------
Net Income (Loss)...........................  $ 12,466    $   (559)   $ 12,214    $ 28,230    $ 20,016
                                              ========    ========    ========    ========    ========
BALANCE SHEET DATA:
Cash and Cash Equivalents...................  $  8,230    $  4,643    $  6,297    $  7,596    $  5,880
Total Assets................................   670,850     687,434     711,486     729,763     747,557
Total Debt(4)...............................   528,662     558,906     579,844     322,199     368,927
Total Stockholder's Equity(5)...............    48,457      36,242      36,801     321,012     302,630
OTHER DATA:
Depreciation................................  $  8,145    $  7,303    $  6,546    $  5,843    $  5,242
Amortization of Intangibles.................    21,075      23,075      28,504      28,278      29,898
Noncash Interest Expense(6).................     4,644       4,425       9,080      11,005       9,255
Capital Expenditures........................     8,526       9,072       8,307       7,724       7,590
</TABLE>
 
---------------
 
(1) Fiscal 1997 includes 53 weeks as compared to 52 weeks for all other fiscal
    years presented.
(2) Data include television advertising expense of $1,217, $6,296, $9,441,
    $16,093 and $4,075 for fiscal years 1997, 1996, 1995, 1994 and 1993,
    respectively.
(3) Consists primarily of the write-off of deferred debt costs and charges
    relating to refinancing of the Company's indebtedness in November 1994.
(4) Increase in total debt in fiscal 1995 reflects the November 1994 refinancing
    of the Company's indebtedness in connection with the payment of a special
    dividend to Media totaling $292,250.
(5) Reflects fiscal 1995 payment of a special dividend to Media totaling
    $292,250.
 
                                        9
<PAGE>   11
 
(6) Noncash interest expense represents accretion of discount interest on 10.09%
    Zero Coupon Notes Due 1997, certain 15% subordinated notes (retired in
    fiscal 1993) and amortization of deferred debt costs. See Notes 6 and 7 of
    Notes to Consolidated Financial Statements.
 
ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
 
LIQUIDITY AND CAPITAL RESOURCES
 
     At March 31, 1997, the Company had cash and cash equivalents of $8.2
million compared to $4.6 million at March 25, 1996. The Company's primary
sources of liquidity are cash generated from operations and amounts available
under the Company's revolving credit commitment.
 
     As of March 31, 1997, the Company had a working capital deficit of $112.4
million of which $59.1 million represents the current portion of long-term
indebtedness. The Company's working capital needs are met by the large amounts
of cash generated by its business as well as amounts available under the Credit
Agreement's $75 million revolving credit commitment. A substantial portion of
the Company's cash is used to service its indebtedness, including the payment of
principal and interest. Temporary shortfalls in available cash are covered by
borrowings under the revolving credit commitment which are reflected as
long-term liabilities.
 
     Management believes that cash provided by operations will be adequate to
meet its operating liquidity requirements, including all required payments of
principal and interest and is not aware of any commitment which would require
unusual amounts of cash or which would change or otherwise restrict the
Company's currently available capital resources. In addition, the Company does
not intend to pay any cash dividends on its common stock in the foreseeable
future. As of March 31, 1997, $67 million was available under the Credit
Agreement's revolving credit commitment.
 
RESULTS OF OPERATIONS
 
     FISCAL 1997 VS FISCAL 1996.  Total revenues were $315,988,000 for fiscal
1997 (which includes 53 weeks as compared to 52 weeks in fiscal 1996), an
increase of $20,938,000 or 7.1% from total revenues of $295,050,000 in the prior
fiscal year.
 
     Circulation revenues (which includes all single copy and subscription
sales) of $273,567,000 increased $16,162,000 or 6.3% from the prior fiscal year
as a result of one additional issue for each publication in fiscal 1997 as well
higher revenues generated by NATIONAL ENQUIRER and SOAP OPERA MAGAZINE. Revenues
from a $.10 per copy increase in cover price for NATIONAL ENQUIRER, effective
with the July 23, 1996 issue, more than offset a decline in NATIONAL ENQUIRER'S
average weekly single copy unit sales from fiscal 1996 of 2.1%; a similar price
increase for STAR largely offset an average weekly unit sales decline of 8.2%.
Management believes the declines in single copy sales of NATIONAL ENQUIRER and
STAR, as well as many other publications sold at the check-out counter, are due
primarily to the increasingly competitive print and electronic media coverage of
personality journalism. SOAP OPERA MAGAZINE'S single copy revenue was higher as
average weekly single copy unit sales increased by approximately 11.7% when
compared to the prior year. Revenues were also favorably impacted by cover price
increases for COUNTRY WEEKLY and WEEKLY WORLD NEWS which showed an increase of
1.9% and a decrease of 6.6%, respectively, in average weekly single copy unit
sales when compared to fiscal 1996.
 
     Subscription revenues of $39,870,000 increased $2,445,000 or 6.5% over
fiscal 1996 as a result of one additional issue for each publication and higher
levels of subscriptions generated by COUNTRY WEEKLY and SOAP OPERA MAGAZINE.
 
     Advertising revenues of $24,280,000 increased $975,000 or 4.2% compared to
fiscal 1996. On an equivalent number of issues basis, advertising revenues
increased by approximately $517,000 or 2.2% reflecting higher levels of national
advertising in both NATIONAL ENQUIRER and COUNTRY WEEKLY.
 
     Operating expenses for fiscal 1997 on an equivalent number of weeks basis
(after deducting television advertising and depreciation and amortization)
increased by $2,597,000 or 1.4%. Distribution, circulation and other cost of
sales together with selling, general and administrative expenses increased by a
combined total of $8,673,000 on an equivalent basis primarily reflecting costs
associated with the Company's expansion of its in-
 
                                       10
<PAGE>   12
 
store marketing, merchandising and information gathering services and higher
subscription expenses. Production expense was lower by $6,059,000 on an
equivalent basis as a result of reduced average paper costs in fiscal 1997 as
compared to the prior year. Television advertising expense was lower by
$5,079,000 as the Company did not repeat the fiscal 1996 national advertising
campaigns for NATIONAL ENQUIRER and STAR. Depreciation and amortization expense
decreased as the amortization of an intangible asset with a 5-year life was
completed in June 1995.
 
     Interest expense decreased $431,000 in fiscal 1997 to $56,284,000 from
$56,715,000 in the prior fiscal year. Decreases in the average outstanding
indebtedness more than offset one additional week's interest in the current
fiscal year.
 
     The Company's effective income tax rates were 57.3% and 106.6% for fiscal
years 1997 and 1996, respectively, as compared to the federal statutory income
tax rate of 35%. The higher effective tax rates result primarily from goodwill
amortization which is not deductible for income tax reporting purposes (see Note
4 of Notes to Consolidated Financial Statements).
 
     FISCAL 1996 VS FISCAL 1995.  Total revenues were $295,050,000 for fiscal
1996, a decrease of 6.4% from total revenues of $315,299,000 for the prior
fiscal year.
 
     Circulation revenues (which includes all single copy and subscription
sales) of $257,405,000 decreased $15,651,000 or 5.7% from the prior fiscal year.
The decrease is primarily a result of declines in single copy unit sales of
14.4% and 10.7% for NATIONAL ENQUIRER and STAR, respectively. Declines in single
copy circulation were offset, in part, by price increases in NATIONAL ENQUIRER
and STAR to $1.29 from $1.25 on March 28, 1995 (issue date). Management believes
the declines in single copy sales of NATIONAL ENQUIRER and STAR, as well as many
other publications sold at the check-out counter, are due primarily to the
increasingly competitive print and electronic media coverage of personality
journalism.
 
     Subscription revenues of $37,425,000 increased $3,903,000 or 11.6% over
fiscal 1995 as a result of both the subscriptions generated by COUNTRY WEEKLY
and higher levels of full-price subscriptions sold by NATIONAL ENQUIRER and
STAR.
 
     Advertising revenues of $23,305,000 decreased $3,728,000 or 13.8% compared
to the prior fiscal year. The advertising revenue decrease was caused primarily
by declines of 10.7% and 17.8% in NATIONAL ENQUIRER and STAR advertising pages,
respectively, reflecting weakness in direct response advertising, particularly
in the collectibles market, as well as continued pressure on average advertising
revenue per page.
 
     Other revenues of $14,340,000 decreased $870,000 or 5.7% resulting
primarily from the expiration in fiscal 1995 of an agreement to provide
merchandising services to an unrelated client by DSI.
 
     Production expense of $84,830,000 increased $9,883,000 or 13.2% reflecting
substantially higher paper costs in fiscal 1996 during which the average cost of
the Company's paper increased to $725 a metric ton from approximately $490 a
metric ton in fiscal 1995. Offsetting these higher paper costs, during fiscal
1996 the Company took steps to reduce paper consumption including lowering the
print orders of its publications and reducing the trim sizes of NATIONAL
ENQUIRER, STAR and WEEKLY WORLD NEWS. In addition, production and prepress
expense savings were achieved from the consolidation of the printing operations
of WEEKLY WORLD NEWS, SOAP OPERA MAGAZINE and COUNTRY WEEKLY.
 
     Total operating expenses, despite the substantial increase in paper costs,
declined by $1,687,000 to $228,714,000 in fiscal 1996 from $230,401,000 in the
prior fiscal year due primarily to reduced intangibles amortization and
continued emphasis by management on cost containment.
 
     Interest expense increased $20,830,000 in fiscal 1996 to $56,715,000 from
$35,885,000 in the prior fiscal year reflecting higher average outstanding
indebtedness resulting from a November 1994 refinancing in connection with the
payment of a special dividend to Media totaling $292,250,000.
 
     The Company's effective income tax rates were 106.6% and 49.9% for fiscal
years 1996 and 1995, respectively, as compared to the federal statutory income
tax rate of 35%. The higher effective tax rates result primarily from goodwill
amortization which is not deductible for income tax reporting purposes (see Note
4 of Notes to Consolidated Financial Statements).
 
                                       11
<PAGE>   13
 
ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
 
                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
 
<TABLE>
<CAPTION>
                                                              PAGE(S)
                                                              -------
<S>                                                           <C>
FINANCIAL STATEMENTS:
  Report of Independent Certified Public Accountants........    13
  Consolidated Balance Sheets as of March 31, 1997 and March
     25, 1996...............................................    14
  Consolidated Statements of Income for Each of the Three
     Fiscal Years in the Period Ended March 31, 1997........    15
  Consolidated Statements of Stockholder's Equity for Each
     of the Three Fiscal Years in the Period Ended March 31,
     1997...................................................    16
  Consolidated Statements of Cash Flows for Each of the
     Three Fiscal Years in the Period Ended March 31,
     1997...................................................    17
  Notes to Consolidated Financial Statements................  18-24
</TABLE>
 
     Schedules have been omitted since the information is not applicable, not
required or because the required information is included in the Consolidated
Financial Statements or Notes thereto.
 
ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE
 
     NONE
 
                                       12
<PAGE>   14
 
               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
 
To the Stockholder of
American Media Operations, Inc.:
 
     We have audited the accompanying consolidated balance sheets of American
Media Operations, Inc. (a Delaware corporation) and subsidiaries as of March 31,
1997 and March 25, 1996, and the related consolidated statements of income,
stockholder's equity and cash flows for each of the three fiscal years in the
period ended March 31, 1997. These financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these financial statements based on our audits.
 
     We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
 
     In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of American Media Operations,
Inc. and subsidiaries as of March 31, 1997 and March 25, 1996, and the results
of their operations and their cash flows for each of the three fiscal years in
the period ended March 31, 1997, in conformity with generally accepted
accounting principles.
 
ARTHUR ANDERSEN LLP
 
Miami, Florida
April 30, 1997
 
                                       13
<PAGE>   15
 
                AMERICAN MEDIA OPERATIONS, INC. AND SUBSIDIARIES
 
                          CONSOLIDATED BALANCE SHEETS
                    AS OF MARCH 31, 1997 AND MARCH 25, 1996
                      (IN 000'S, EXCEPT SHARE INFORMATION)
 
<TABLE>
<CAPTION>
                                                                1997       1996
                                                              --------   --------
<S>                                                           <C>        <C>
                                     ASSETS
CURRENT ASSETS:
  Cash and cash equivalents.................................  $  8,230   $  4,643
  Receivables, net..........................................     8,191      5,405
  Inventories...............................................    13,391     14,526
  Prepaid income taxes......................................        --      1,184
  Prepaid expenses and other................................     2,626      2,790
                                                              --------   --------
         Total current assets...............................    32,438     28,548
                                                              --------   --------
DUE FROM PARENT COMPANY.....................................     1,048        617
                                                              --------   --------
PROPERTY AND EQUIPMENT, at cost:
  Land and buildings........................................     4,039      4,039
  Machinery, fixtures and equipment.........................    16,159     11,781
  Display racks.............................................    18,854     18,424
                                                              --------   --------
                                                                39,052     34,244
  Less -- accumulated depreciation..........................   (14,819)   (12,981)
                                                              --------   --------
                                                                24,233     21,263
                                                              --------   --------
DEFERRED DEBT COSTS, net....................................    11,011     13,811
                                                              --------   --------
GOODWILL, net of accumulated amortization of $111,285 and
  $96,130...................................................   493,966    509,121
                                                              --------   --------
OTHER INTANGIBLES, net of accumulated amortization of
  $39,846 and $33,926.......................................   108,154    114,074
                                                              --------   --------
                                                              $670,850   $687,434
                                                              ========   ========
                      LIABILITIES AND STOCKHOLDER'S EQUITY
CURRENT LIABILITIES:
  Current portion of term loan..............................  $ 43,355   $ 34,744
  10.09% Zero Coupon Notes Due 1997.........................    15,772         --
  Accounts payable..........................................    14,167     18,049
  Accrued expenses..........................................    18,119     14,537
  Accrued interest..........................................    10,037     12,178
  Accrued and current deferred income taxes.................    11,022      9,093
  Deferred revenues.........................................    32,348     30,506
                                                              --------   --------
         Total current liabilities..........................   144,820    119,107
                                                              --------   --------
TERM LOAN AND REVOLVING CREDIT COMMITMENT, net of current
  portion...................................................   269,401    309,756
                                                              --------   --------
SUBORDINATED INDEBTEDNESS:
  11.63% Senior Subordinated Notes Due 2004.................   200,000    200,000
  10.09% Zero Coupon Notes Due 1997.........................        --     14,272
  10.38% Senior Subordinated Notes Due 2002.................       134        134
                                                              --------   --------
                                                               200,134    214,406
                                                              --------   --------
DEFERRED INCOME TAXES.......................................     8,038      7,923
                                                              --------   --------
COMMITMENTS AND CONTINGENCIES (NOTE 8)

STOCKHOLDER'S EQUITY:
  Common stock, $.20 par value; 10,000 shares authorized,
    7,507 shares issued and outstanding.....................         2          2
  Additional paid-in capital................................    26,039     26,290
  Retained earnings.........................................    22,416      9,950
                                                              --------   --------
         TOTAL STOCKHOLDER'S EQUITY.........................    48,457     36,242
                                                              --------   --------
                                                              $670,850   $687,434
                                                              ========   ======== 
</TABLE>
 
          The accompanying notes to consolidated financial statements
           are an integral part of these consolidated balance sheets.
 
                                       14
<PAGE>   16
 
                AMERICAN MEDIA OPERATIONS, INC. AND SUBSIDIARIES
 
                       CONSOLIDATED STATEMENTS OF INCOME
                FOR THE THREE FISCAL YEARS ENDED MARCH 31, 1997
                                   (IN 000'S)
 
<TABLE>
<CAPTION>
                                                                      FISCAL YEAR ENDED
                                                              ---------------------------------
                                                              MARCH 31,   MARCH 25,   MARCH 27,
                                                                1997        1996        1995
                                                              ---------   ---------   ---------
<S>                                                           <C>         <C>         <C>
OPERATING REVENUES:
  Circulation...............................................  $273,567    $257,405    $273,056
  Advertising...............................................    24,280      23,305      27,033
  Other.....................................................    18,141      14,340      15,210
                                                              --------    --------    --------
                                                               315,988     295,050     315,299
                                                              --------    --------    --------
OPERATING EXPENSES:
  Editorial.................................................    28,369      27,851      30,128
  Production................................................    80,286      84,830      74,947
  Distribution, circulation and other cost of sales.........    60,514      53,601      56,438
  Selling, general and administrative expenses..............    29,211      25,758      24,397
  Television advertising....................................     1,217       6,296       9,441
  Depreciation and amortization.............................    29,220      30,378      35,050
                                                              --------    --------    --------
                                                               228,817     228,714     230,401
                                                              --------    --------    --------
  Operating income..........................................    87,171      66,336      84,898
INTEREST EXPENSE............................................   (56,284)    (56,715)    (35,885)
OTHER EXPENSE, net..........................................    (1,705)     (1,195)     (1,409)
                                                              --------    --------    --------
  Income before provision for income taxes and extraordinary
     charge.................................................    29,182       8,426      47,604
PROVISION FOR INCOME TAXES..................................    16,716       8,985      23,755
                                                              --------    --------    --------
  Income (loss) before extraordinary charge.................    12,466        (559)     23,849

EXTRAORDINARY CHARGE, net of income taxes (Note 6)..........        --          --     (11,635)
                                                              --------    --------    --------
          Net income (loss).................................  $ 12,466    $   (559)   $ 12,214
                                                              ========    ========    ========
</TABLE>
 
          The accompanying notes to consolidated financial statements
             are an integral part of these consolidated statements.
 
                                       15
<PAGE>   17
 
                AMERICAN MEDIA OPERATIONS, INC. AND SUBSIDIARIES
 
                CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY
                FOR THE THREE FISCAL YEARS ENDED MARCH 31, 1997
                      (IN 000'S, EXCEPT SHARE INFORMATION)
 
<TABLE>
<CAPTION>
                                                              COMMON STOCK     ADDITIONAL
                                                             ---------------    PAID-IN     RETAINED
                                                             SHARES   AMOUNT    CAPITAL     EARNINGS
                                                             ------   ------   ----------   --------
<S>                                                          <C>      <C>      <C>          <C>
Balance, March 28, 1994....................................  7,507      $2     $ 318,540    $ 2,470
Common stock dividends.....................................     --      --      (292,250)    (4,175)
Net income.................................................     --      --            --     12,214
                                                             -----      --     ---------    -------
Balance, March 27, 1995....................................  7,507       2        26,290     10,509
Net loss...................................................     --      --            --       (559)
                                                             -----      --     ---------    -------
Balance, March 25, 1996....................................  7,507       2        26,290      9,950
Other......................................................     --      --          (251)        --
Net income.................................................     --      --            --     12,466
                                                             -----      --     ---------    -------
Balance, March 31, 1997....................................  7,507      $2     $  26,039    $22,416
                                                             =====    ======   =========    =======
</TABLE>
 
          The accompanying notes to consolidated financial statements
             are an integral part of these consolidated statements.
 
                                       16
<PAGE>   18
 
                AMERICAN MEDIA OPERATIONS, INC. AND SUBSIDIARIES
 
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                FOR THE THREE FISCAL YEARS ENDED MARCH 31, 1997
                                   (IN 000'S)
 
<TABLE>
<CAPTION>
                                                                       FISCAL YEAR ENDED
                                                              -----------------------------------
                                                              MARCH 31,    MARCH 25,    MARCH 27,
                                                                1997         1996         1995
                                                              ---------    ---------    ---------
<S>                                                           <C>          <C>          <C>
Cash Flows from Operating Activities:
  Net income (loss).........................................  $ 12,466     $   (559)    $  12,214
                                                              --------     --------     ---------
Adjustments to reconcile net income (loss) to net cash
  provided from operating activities --
  Extraordinary charge, net of income taxes.................        --           --        11,635
  Depreciation and amortization.............................    29,220       30,378        35,050
  Deferred debt cost amortization...........................     3,144        3,090         2,098
  Senior subordinated discount note accretion...............     1,500        1,335         6,982
  Deferred income tax provision.............................     1,180          398         3,963
  Decrease (increase) in --
    Receivables, net........................................    (2,540)        (517)       (1,144)
    Due from Parent Company.................................      (431)        (446)         (171)
    Inventories.............................................     1,135       (5,895)        4,081
    Prepaid income taxes....................................     1,184        3,742        (4,926)
    Prepaid expenses and other..............................       283          451           994
  Increase (decrease) in --
    Accounts payable........................................    (3,912)       1,547          (124)
    Accrued expenses........................................     2,894       (4,560)       (2,350)
    Payable to Parent Company...............................        --           --          (153)
    Accrued interest........................................    (2,141)        (699)        8,143
    Accrued and current deferred income taxes...............       864          416         2,258
    Deferred revenues.......................................     1,842          343         2,357
                                                              --------     --------     ---------
         Total adjustments..................................    34,222       29,583        68,693
                                                              --------     --------     ---------
    Net cash provided from operating activities.............    46,688       29,024        80,907
                                                              --------     --------     ---------
Cash Flows from Investing Activities:
  Capital expenditures......................................    (8,526)      (9,072)       (8,307)
  Acquisition of business...................................    (2,236)          --            --
  Payments on note receivable...............................        --        1,492           419
                                                              --------     --------     ---------
         Net cash used in investing activities..............   (10,762)      (7,580)       (7,888)
                                                              --------     --------     ---------
Cash Flows from Financing Activities:
  Term loan and revolving credit commitment principal
    repayments..............................................   (85,744)     (73,250)     (184,750)
  Proceeds from term loan and revolving credit commitment...    54,000       51,000       428,500
  Repayment of senior subordinated indebtedness.............        --          (23)     (204,653)
  Proceeds from senior subordinated indebtedness............        --           --       200,000
  Payment of deferred debt costs............................      (344)        (825)      (16,990)
  Dividends paid............................................        --           --      (296,425)
  Other.....................................................      (251)          --            --
                                                              --------     --------     ---------
         Net cash used in financing activities..............   (32,339)     (23,098)      (74,318)
                                                              --------     --------     ---------
Net Increase (Decrease) in Cash and Cash Equivalents........     3,587       (1,654)       (1,299)
Cash and Cash Equivalents at Beginning of Year..............     4,643        6,297         7,596
                                                              --------     --------     ---------
Cash and Cash Equivalents at End of Year....................  $  8,230     $  4,643     $   6,297
                                                              ========     ========     =========
Supplemental Disclosures of Cash Flow Information:
  Cash paid during the year for --
    Income taxes............................................  $ 13,203     $  4,143     $  22,178
    Interest................................................    53,763       53,709        19,351
</TABLE>
 
          The accompanying notes to consolidated financial statements
             are an integral part of these consolidated statements.
 
                                       17
<PAGE>   19
 
                AMERICAN MEDIA OPERATIONS, INC. AND SUBSIDIARIES
 
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                         (000'S OMITTED IN ALL TABLES)
 
(1)  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
BASIS OF CONSOLIDATION
 
     The consolidated financial statements include the accounts of American
Media Operations, Inc. ("Operations", a wholly-owned subsidiary of American
Media, Inc., "Media") and its subsidiaries (National Enquirer, Inc., Star
Editorial, Inc., SOM Publishing, Inc., Weekly World News, Inc., Country Weekly,
Inc. and Distribution Services, Inc., among others), collectively, the
"Company". The Company publishes six weekly publications: NATIONAL ENQUIRER,
STAR, SOAP OPERA MAGAZINE, WEEKLY WORLD NEWS, COUNTRY WEEKLY AND SOAP OPERA
NEWS. All significant intercompany transactions and balances have been
eliminated in consolidation. The Company's fiscal year, which ends on the last
Monday in March, includes 53 weeks for the fiscal year ended March 31, 1997 as
compared to 52 weeks for the fiscal years ended March 25, 1996 and March 27,
1995.
 
REVENUE RECOGNITION
 
     Substantially all publication sales, except subscriptions, are made through
an unrelated distributor. Issues, other than special topic issues, are placed on
sale approximately one week prior to the issue date; however, circulation
revenues and related expenses are recognized for financial statement purposes on
an issue date basis (i.e., off sale date). Special topic issue revenues and
related expenses are recognized at the on sale date. On the date each issue is
placed on sale, the Company receives a percentage of the issue's estimated sales
proceeds for its publications as an advance from the distributors. All of the
Company's publications are sold with full return privileges.
 
     Revenues from copy sales are net of reserves provided for expected sales
returns which are established in accordance with generally accepted accounting
principles after considering such factors as sales history and available market
information. The Company continually monitors the adequacy of the reserves and
makes adjustments when necessary.
 
     Subscriptions received in advance of the issue date are recognized as
income over the term of the subscription on a straight-line basis. Advertising
revenues are recognized in the period in which the related advertising appears
in the publications.
 
     Deferred revenues were comprised of the following:
 
<TABLE>
<CAPTION>
                                                               1997      1996
                                                              -------   -------
<S>                                                           <C>       <C>
Single Copy.................................................  $ 7,872   $ 7,687
Subscriptions...............................................   24,114    22,421
Advertising.................................................      362       398
                                                              -------   -------
                                                              $32,348   $30,506
                                                              =======   =======
</TABLE>
 
     Other revenues, primarily from marketing services performed for third
parties by Distribution Services, Inc., are recognized when the service is
performed.
 
                                       18
<PAGE>   20
 
                AMERICAN MEDIA OPERATIONS, INC. AND SUBSIDIARIES
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                         (000'S OMITTED IN ALL TABLES)
 
PROPERTY AND EQUIPMENT
 
     The Company uses straight-line and accelerated depreciation methods for
financial reporting and Federal income tax purposes, respectively. The estimated
lives used in computing depreciation for financial reporting purposes are as
follows:
 
<TABLE>
<CAPTION>
                                                              YEARS
                                                              -----
<S>                                                           <C>
Buildings...................................................   22
Machinery, fixtures and equipment...........................  3-10
Display racks...............................................   3
</TABLE>
 
INVENTORIES
 
     Inventories are generally stated at the lower of cost or market. The
Company uses the last-in, first-out (LIFO) cost method of valuing its
inventories. If the first-in, first-out (FIFO) cost method of valuation, which
approximates market value, had been used, inventories would have been
approximately $810,000 lower, due to recent declines in paper costs, and
$2,928,000 higher than the amounts reported in the accompanying consolidated
balance sheets for 1997 and 1996, respectively. Paper inventory for 1997 is
stated in accordance with generally accepted accounting principles at LIFO cost
as the use of such inventory would result in normal historical gross margins.
Inventories are comprised of the following:
 
<TABLE>
<CAPTION>
                                                               1997      1996
                                                              -------   -------
<S>                                                           <C>       <C>
Raw materials -- paper......................................  $ 9,477   $10,403
Finished product -- paper, production and distribution costs
  of future issues..........................................    3,914     4,123
                                                              -------   -------
                                                              $13,391   $14,526
                                                              =======   =======
</TABLE>
 
USE OF ESTIMATES
 
     The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of assets and liabilities at the date of the financial statements,
and the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
 
CONSOLIDATED STATEMENTS OF CASH FLOWS
 
     For purposes of the accompanying consolidated statements of cash flows, the
Company considers cash and cash equivalents to be cash on hand or deposited in
demand deposit accounts with financial institutions and highly liquid
investments purchased with an original maturity of three months or less.
 
(2)  INTANGIBLE ASSETS
 
     Purchase price allocations for acquisitions have been made in accordance
with Accounting Principles Board Opinion No. 16. The excess of the purchase
price, including liabilities assumed, over tangible net assets acquired has been
allocated to either specifically identified intangibles or goodwill.
 
     Statement of Financial Accounting Standards ("SFAS") No. 121, "Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed
Of " requires that long-lived assets and certain identifiable intangibles be
reviewed for impairment whenever events or changes in circumstances indicate
that the carrying amount of an asset may not be recoverable. SFAS No. 121 also
requires that long-lived assets and certain identifiable intangibles to be
disposed of be reported at the lower of carrying amount or fair value less
 
                                       19
<PAGE>   21
 
                AMERICAN MEDIA OPERATIONS, INC. AND SUBSIDIARIES
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                         (000'S OMITTED IN ALL TABLES)
 
cost to sell. The Company considers certain events and circumstances including,
among others, the historical and projected operating results of acquired
businesses, industry trends and general economic conditions to assess whether
the remaining estimated useful life of intangible assets may warrant revision or
that the remaining balance of intangible assets may not be recoverable. When
such assessment indicates that an intangible asset should be evaluated for
possible impairment, the Company uses an estimate of undiscounted cash flow over
the remaining life of the intangible asset in measuring the recoverability. No
such event has occurred to the knowledge of the Company, and the Company has
determined there to be no impairment. The adoption of this statement in fiscal
1997 had no impact on the Company's consolidated financial position or results
of operations.
 
     Goodwill is amortized on a straight-line basis over 40 years. For each of
the fiscal years 1997, 1996 and 1995, amortization of goodwill charged to
depreciation and amortization in the accompanying consolidated statements of
income totaled approximately $15,155,000.
 
     Certain intangible assets recorded in connection with the acquisition of
Star are amortized on a straight-line basis over their estimated useful lives of
5 to 25 years. Amortization expense relating to these intangible assets for
fiscal years 1997, 1996 and 1995, totaling approximately $5,920,000, $7,920,000
and $13,350,000 respectively, is included in depreciation and amortization in
the accompanying consolidated statements of income.
 
(3)  FAIR VALUE OF FINANCIAL INSTRUMENTS
 
     The estimated fair value of the Company's financial instruments is as
follows:
 
<TABLE>
<CAPTION>
                                                       1997                  1996
                                                -------------------   -------------------
                                                CARRYING     FAIR     CARRYING     FAIR
                                                 AMOUNT     VALUE      AMOUNT     VALUE
                                                --------   --------   --------   --------
<S>                                             <C>        <C>        <C>        <C>
Term loan and revolving credit facility,
  including current portion...................  $312,756   $312,756   $344,500   $344,500
Subordinated indebtedness.....................   215,906    230,407    214,406    221,406
Interest rate swap agreement liability........        88        170        102      1,194
</TABLE>
 
     The fair value of the Company's financial instruments is estimated based on
the quoted market prices for the same or similar issues or on the current rate
offered to the Company for financial instruments of the same remaining
maturities. The carrying amount for cash equivalents approximates fair value
because of the short maturity of those instruments.
 
     In May 1995, the Company entered into a three-year $100 million notional
amount interest rate swap agreement which effectively converts a portion of its
variable-rate debt to fixed-rate debt at 6.3% per annum to reduce the Company's
risk of incurring higher interest costs in the event of rising interest rates.
Net interest paid or received related to such agreements is recorded using the
accrual method as an adjustment to interest expense. The carrying amount for the
interest rate swap agreement represents net interest payable as of period end.
In July 1994, the Company terminated an interest rate swap agreement resulting
in a gain of $1,500,000 which was amortized as a reduction of interest expense
through April 1996. Net interest income (expense) related to interest rate swap
agreements totaled $(793,000), $405,000 and $806,000 for fiscal years 1997, 1996
and 1995, respectively.
 
                                       20
<PAGE>   22
 
                AMERICAN MEDIA OPERATIONS, INC. AND SUBSIDIARIES
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                         (000'S OMITTED IN ALL TABLES)
 
(4)  INCOME TAXES
 
     The Company files a consolidated Federal income tax return with Media and
calculates its income on a separate return basis. The provision for income
taxes, which excludes tax credits related to fiscal year 1995's extraordinary
charge, consists of the following:
 
<TABLE>
<CAPTION>
                                                              1997      1996     1995
                                                             -------   ------   -------
<S>                                                          <C>       <C>      <C>
Current:
  Federal..................................................  $13,824   $7,641   $17,535
  State....................................................    1,712      946     2,257
                                                             -------   ------   -------
          Total current....................................   15,536    8,587    19,792
                                                             -------   ------   -------
Deferred:
  Federal..................................................    1,050      354     3,511
  State....................................................      130       44       452
                                                             -------   ------   -------
          Total deferred...................................    1,180      398     3,963
                                                             -------   ------   -------
                                                             $16,716   $8,985   $23,755
                                                             =======   ======   =======
</TABLE>
 
     A reconciliation of the expected income tax provision at the statutory
Federal income tax rate of 35% to the reported income tax provision is as
follows:
 
<TABLE>
<CAPTION>
                                                              1997      1996     1995
                                                             -------   ------   -------
<S>                                                          <C>       <C>      <C>
Expected income tax provision at statutory rate............  $10,214   $2,949   $16,661
Nondeductible goodwill.....................................    5,304    5,304     5,304
State income taxes, net of Federal benefit.................    1,198      644     1,761
Other, net.................................................       --       88        29
                                                             -------   ------   -------
                                                             $16,716   $8,985   $23,755
                                                             =======   ======   =======
</TABLE>
 
     Deferred taxes reflect the impact of temporary differences between the
amount of assets and liabilities for financial reporting purposes and such
amounts as measured by tax laws and regulations. The net deferred tax liability
is comprised of the following:
 
<TABLE>
<CAPTION>
                                                                1997       1996
                                                              --------   --------
<S>                                                           <C>        <C>
Gross deferred tax assets...................................  $    621   $    758
                                                              --------   --------
Intangibles amortization....................................    (6,116)    (6,451)
Expense recognition differences.............................    (3,698)    (3,636)
Subscription acquisition costs..............................    (1,882)    (1,153)
Accelerated depreciation....................................    (1,474)    (1,024)
Book over tax basis of non-depreciable assets...............      (448)      (448)
Other deferred tax liabilities..............................      (542)      (405)
                                                              --------   --------
          Gross deferred tax liabilities....................   (14,160)   (13,117)
                                                              --------   --------
          Net deferred tax liabilities......................  $(13,539)  $(12,359)
                                                              ========   ========
</TABLE>
 
     Included in accrued and current deferred income taxes in the accompanying
consolidated balance sheets for fiscal years 1997 and 1996 are net current
deferred taxes payable of $5,501,000 and $4,436,000, respectively.
 
                                       21
<PAGE>   23
 
                AMERICAN MEDIA OPERATIONS, INC. AND SUBSIDIARIES
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                         (000'S OMITTED IN ALL TABLES)
 
(5)  CREDIT AGREEMENTS
 
     In November 1994, the Company completed a refinancing of its then
outstanding indebtedness, including its borrowings from banks and certain
subordinated indebtedness, in connection with the payment of a special dividend
to Media totaling $292.2 million. As part of the refinancing, the Company and a
bank syndicate whose agent bank is The Chase Manhattan Corporation (the "Agent
Bank" and, collectively the "Banks") entered into a credit agreement (as amended
from time to time, the "Credit Agreement") comprised of a $370 million term loan
commitment and a $75 million revolving credit commitment. The Credit Agreement
includes the following:
 
          (a) TERM LOAN COMMITMENTS -- The Company's term loans consist of a
     $270 million (original amount) commitment (the "Tranche A" loans) and a
     $100 million (original amount) commitment (the "Tranche B" loans). Amounts
     borrowed under the Tranche A commitment bear interest at rates based upon
     either the Alternate Base Rate (as defined) plus 0% to 1 1/4% or the LIBO
     Rate (as defined) plus 1% to 2 1/4%, predicated upon satisfaction of
     certain Credit Agreement covenants related to the Company's operating cash
     flow levels. Tranche B loans bear interest at either the Alternate Base
     Rate plus 1 1/2% or the LIBO Rate plus 2 1/2%.
 
          Amounts due under the term loan commitments are payable in varying
     semi-annual installments through September 2002. With respect to fiscal
     year 1996 the Company was required to make a prepayment against its term
     loan commitment in the amount of $1,107,000 reflecting 75% of its Excess
     Cash Flow (as defined). No Excess Cash Flow prepayment was required for
     fiscal year 1997. Excess Cash Flow prepayments (if any) of 50% for fiscal
     year 1998 and thereafter are required. Any prepayments made from Excess
     Cash Flow are applied ratably to Tranche A and Tranche B loans based on
     their original commitment amounts and then, within one tranche, ratably to
     the installments of principal then remaining. As of March 31, 1997,
     $207,552,000 and $97,204,000 was outstanding under the term loan's Tranche
     A and Tranche B commitments, respectively.
 
          (b) REVOLVING CREDIT COMMITMENT -- The Credit Agreement also provides
     for additional borrowings up to a maximum of $75 million, bearing interest
     at the Tranche A rates described above. This commitment, which expires on
     November 10, 2001, allows funds to be borrowed and repaid from time to time
     with permanent reductions in the revolving credit commitment permitted at
     the Company's option. As of March 31, 1997, borrowings of $8,000,000 were
     outstanding under the revolving credit commitment.
 
          (c) COMMITMENT FEES -- The Company is required to pay a commitment fee
     ranging from 1/4% to 1/2% of the unused portion of the revolving credit
     commitment. Commitment fees under the Credit Agreements totaled
     approximately $330,000, $461,000 and $540,000 for fiscal years 1997, 1996
     and 1995, respectively.
 
          (d) GUARANTEE, COLLATERAL AND FINANCIAL COVENANTS -- The Company's
     obligations under the Credit Agreement are guaranteed by all of its
     subsidiaries and Media. The obligations and such guarantees are secured by
     (i) a pledge by the Company of all of the capital stock of its
     subsidiaries, (ii) a pledge of all of the capital stock of the Company and
     (iii) a security interest in substantially all of the assets of the
     Company's subsidiaries.
 
     In addition to the above, the Credit Agreement also contains certain
covenants that, among others, restrict paying cash dividends, incurring
additional indebtedness, entering into certain mergers or consolidations, making
capital expenditures and selling or otherwise disposing of assets; the Company
also is required to satisfy certain financial tests relating to operating cash
flow and debt coverage ratios. The Company will pay no cash dividends on its
common stock in the foreseeable future, instead using cash generated from
operating
 
                                       22
<PAGE>   24
 
                AMERICAN MEDIA OPERATIONS, INC. AND SUBSIDIARIES
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                         (000'S OMITTED IN ALL TABLES)
 
results principally to make principal and interest payments on its indebtedness.
In addition, the payment of future cash dividends, if any, may be limited under
the restrictive covenants of the Credit Agreement.
 
     As permitted under the covenants of the Credit Agreement, management fees
to affiliates totaling $1,798,000, $1,399,000 and $1,976,000 are included in
other expense, net in the accompanying consolidated statements of income for the
fiscal years 1997, 1996 and 1995, respectively.
 
     The effective interest rates under the Credit Agreement, including amounts
borrowed under the term loan commitments and revolving credit commitment, as of
March 31, 1997, and for the fiscal years 1997, 1996 and 1995 were 7.7%, 7.7%,
8.1% and 7.8%, respectively.
 
     Pursuant to the terms of the Credit Agreement, the Company was required to
hedge a portion of its variable rate interest exposure. Accordingly, the Company
entered into a series of one-year step cap agreements with major financial
institutions on $100 million notional amount of borrowings. The interest rate
hedge is at 9% through its maturity in January 1998. The interest rate cap bears
no market risk above the premium paid which is being amortized on a
straight-line basis over the life of the cap. As of March 31, 1997, the carrying
value of the interest rate cap totaled $315,000.
 
(6)  SUBORDINATED INDEBTEDNESS
 
     The Company's 11.63% Senior Subordinated Notes due 2004 (the "Senior
Subordinated Notes due 2004"), which mature on November 15, 2004, pay interest
semi-annually on May 15 and November 15 and are redeemable at the Company's
option after November 14, 1999 at prices ranging from 104.4% to 100.0% of their
face amount. The indenture under which the Senior Subordinated Notes due 2004
were issued includes restrictive covenants that limit, among other things,
paying cash dividends, incurring indebtedness, mergers, consolidations and other
Restricted Payments (as defined in the Indenture).
 
     In connection with the refinancing of its indebtedness in fiscal year 1995
the Company purchased $119,018,000 and $99,861,000 principal amount of its
10.09% Zero Coupon Senior Subordinated Notes due 1997 (the "Zero Coupon Notes")
and 10.38% Senior Subordinated Notes due 2002 (the "Senior Subordinated Notes
due 2002"), respectively, and recorded an extraordinary charge, net of income
taxes, of $11,635,000 reflecting the premiums paid in excess of the recorded
amounts of the related indebtedness, the write-off of deferred debt costs (see
Note 7) and certain other fees and expenses.
 
     The Zero Coupon Notes, of which $15,962,000 in principal amount
($15,772,000 accreted book value) was outstanding at March 31, 1997, are due May
15, 1997. In fiscal years 1997, 1996 and 1995, the Company accreted original
issue discount of $1,500,000, $1,335,000 and $6,982,000, respectively, on Zero
Coupon Notes, which amounts are included in interest expense in the accompanying
consolidated statements of income.
 
     Including the amounts borrowed under the Credit Agreement, the following
represents aggregate payments of principal due as of March 31, 1997 under the
Company's long-term indebtedness for the next five fiscal years calculated after
(i) giving effect to accretion of discount on the Zero Coupon Notes at their
 
                                       23
<PAGE>   25
 
                AMERICAN MEDIA OPERATIONS, INC. AND SUBSIDIARIES
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                         (000'S OMITTED IN ALL TABLES)
 
maturity and (ii) excluding any prepayments that may be required under the
Credit Agreement's Excess Cash Flow provision:
 
<TABLE>
<CAPTION>
                                                              PRINCIPAL
                        FISCAL YEAR                           PAYMENTS
                        -----------                           ---------
<S>                                                           <C>
  1998......................................................   $ 59,317
  1999......................................................     47,341
  2000......................................................     52,575
  2001......................................................     57,809
  2002......................................................     41,889
  Thereafter................................................    269,921
                                                               --------
                                                               $528,852
                                                               ========
</TABLE>
 
(7)  DEFERRED DEBT COSTS
 
     Certain costs incurred in connection with the issuance of the Company's
long-term debt have been deferred and are amortized as part of interest expense
over periods from 8 to 10 years. For fiscal years 1997, 1996 and 1995,
amortization of deferred debt costs which is included in interest expense in the
accompanying consolidated statements of income totaled approximately $3,144,000,
$3,090,000, and $2,098,000, respectively.
 
     In connection with the redemption of the Zero Coupon Notes and Senior
Subordinated Notes due 2002 and the amendment and restatement of the Credit
Agreement, approximately $4,703,000, representing a portion of related
unamortized deferred debt costs, was written off and reflected as a component of
the extraordinary charge in the accompanying consolidated statement of income
for fiscal year 1995.
 
(8)  COMMITMENTS AND CONTINGENCIES
 
LITIGATION
 
     Various suits and claims arising in the ordinary course of business have
been instituted against the Company. The Company has various insurance policies
available to recover potential legal costs incurred by it. The Company
periodically evaluates and assesses the risks and uncertainties associated with
litigation independent from those associated with its potential claim for
recovery from third party insurance carriers. At present, in the opinion of
management, after consultation with legal counsel, the liability resulting from
litigation, if any, will not have a material effect on the Company's
consolidated financial statements.
 
PRINTING AGREEMENT
 
     The Company has entered into a 15 year printing agreement expiring in
fiscal 2011 with an unrelated printer to print NATIONAL ENQUIRER and STAR. Based
on current pricing and production levels this contract is currently estimated to
cost approximately $197 million over its remaining life as follows:
 
<TABLE>
<CAPTION>
                        FISCAL YEAR
                        -----------
<S>                                                           <C>
  1998......................................................  $ 14,355
  1999......................................................    14,355
  2000......................................................    14,605
  2001......................................................    14,587
  2002......................................................    14,587
  Thereafter................................................   124,256
                                                              --------
                                                              $196,745
                                                              ========
</TABLE>
 
     In addition, the contract requires pricing adjustments based on changes in
the Consumer Price Index.
 
                                       24
<PAGE>   26
 
                                    PART IV
 
ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
 
     The following documents are filed with, or incorporated by reference in,
and as part of, this Annual Report on Form 10-K.
 
  1. Financial Statements
 
     For a complete list of the Financial Statements filed with this Annual
Report on Form 10-K, see the Index to Consolidated Financial Statements on Page
12.
 
  2. Exhibits
 
<TABLE>
<CAPTION>
EXHIBIT
NUMBER                            DESCRIPTION OF EXHIBIT
-------                           ----------------------
<C>       <C>  <S>
 *3.1      --  Certificate of Incorporation of Enquirer/Star, Inc. and
               amendments thereto (incorporated by reference to Operation's
               Registration Statement on Form S-1, Registration No.
               33-46676, Part II, Item 16, Exhibit 3.5, as filed on March
               25, 1992).(1)
 
 *3.2      --  Amended By-Laws of Enquirer/Star, Inc. (incorporated by
               reference to Operation's Registration Statement on Form S-1,
               Registration No. 33-46676, Part II, Item 16, Exhibit 3.6, as
               filed on March 25, 1992).(1)
 *3.3      --  Amendment of Certificate of Incorporation of Operations
               dated November 7, 1994 changing its name to American Media
               Operations, Inc. from Enquirer/Star, Inc. (incorporated by
               reference from Operation's Annual Report on Form 10-K for
               the year ended March 27, 1995, filed as Exhibit 3.3, File
               No. 1-11112).
 *4.1      --  Amended and Restated Security Agreement dated as of October
               4, 1989, along with the Security Agreement Amendment, dated
               as of June 28, 1990, among GP Group, Inc. and its
               subsidiaries in favor of Manufacturers Hanover Trust Company
               (now The Chase Manhattan Corporation) as agent for certain
               banks (in that capacity "as Agent") and certain other
               parties (incorporated by reference to Media's Registration
               Statement on Form S-1, Registration No. 33-40647, Part II,
               Item 16, Exhibit 4.3, as filed on May 17, 1991).(1)
 *4.2      --  Security Agreement Supplement dated as of November 21, 1994
               made by Operations and Country Weekly, Inc. in favor of
               Chemical Bank (now The Chase Manhattan Corporation), as
               Agent (incorporated by reference from Operation's Annual
               Report on Form 10-K for the year ended March 27, 1995, filed
               as Exhibit 4.2, File No. 1-11112).
 *4.3      --  Subsidiary Guarantee dated June 7, 1989 made by the
               subsidiaries of GP Group, Inc. in favor of Manufacturers
               Hanover Trust Company (now The Chase Manhattan Corporation)
               as Agent (incorporated by reference to Media's Registration
               Statement on Form S-1, Registration No. 33-40647, Part II,
               Item 16, Exhibit 4.6, as filed on May 17, 1991).(1)
 *4.4      --  Guarantee Supplement dated November 21, 1994 to Subsidiary
               Guarantee dated June 7, 1989 made by Operations and Country
               Weekly, Inc. in favor of Chemical Bank (now The Chase
               Manhattan Corporation), as Agent (incorporated by reference
               from Operation's Annual Report on Form 10-K for the year
               ended March 27, 1995, filed as Exhibit 4.4, File No.
               1-11112).
 *4.5      --  Company Pledge Agreement dated as of June 7, 1989, between
               GP Group Inc. and Manufacturers Hanover Trust Company (now
               The Chase Manhattan Corporation) as Agent (incorporated by
               reference to Amendment No. 2 to Media's Registration
               Statement on Form S-1, Registration No. 33-40647, Part II,
               Item 16, Exhibit 4.20 as filed on July 11, 1991).(1)
 *4.6      --  Pledge Agreement Supplement dated as of November 21, 1994 to
               Pledge Agreement dated as of June 7, 1989 made by
               Operations, in favor of Chemical Bank (now The Chase
               Manhattan Corporation), as Agent (incorporated by reference
               from Operation's Annual Report on Form 10-K for the year
               ended March 27, 1995, filed as Exhibit 4.6, File No.
               1-11112).
 
</TABLE>

                                       25

<PAGE>   27
<TABLE>
<CAPTION>
EXHIBIT
NUMBER                            DESCRIPTION OF EXHIBIT
-------                           ----------------------
<C>       <C>  <S>
 *4.7      --  Senior Subordinated Note Indenture dated as of November 1,
               1994 from Enquirer/Star, Inc. in favor of United States
               Trust Company of New York, as Trustee, relating to Senior
               Subordinated Notes due 2004 (including form of Senior
               Subordinated Notes) (incorporated by reference from
               Operation's Annual Report on Form 10-K for the year ended
               March 27, 1995, filed as Exhibit 4.7, File No. 1-11112).(1)
 *4.8      --  Third Amended and Restated Credit Agreement among
               Enquirer/Star, Inc., certain Banks and Chemical Bank (now
               The Chase Manhattan Corporation), as Agent, dated as of
               November 10, 1994 (incorporated by reference from
               Operation's Annual Report on Form 10-K for the year ended
               March 27, 1995, filed as Exhibit 4.8, File No. 1-11112).(1)
 *4.9      --  First Amendment dated February 1, 1996 to Third Amended and
               Restated Credit Agreement among Enquirer/Star, Inc., certain
               Banks and Chemical Bank (now The Chase Manhattan
               Corporation), as Agent, dated as of November 10, 1994
               (incorporated by reference from Operation's Quarterly Report
               on Form 10-Q for the quarter ended December 25, 1995, filed
               as Exhibit 4.2, File No. 1-11112).(1)
  4.10     --  Second Amendment dated March 20, 1997 to Third Amended and
               Restated Credit Agreement among Enquirer/Star, Inc., certain
               Banks and Chemical Bank (now The Chase Manhattan Bank), as
               Agent, dated as of November 10, 1994.(1)
*10.1      --  Split Dollar Life Insurance Agreement dated July 3, 1987,
               between GP Group, Inc. and Iain Calder (incorporated by
               reference to Media's Registration Statement on Form S-1,
               Registration No. 33-40647, Part II, Item 16, Exhibit 10.2,
               as filed on May 17, 1991).(1)
*10.2      --  Tax Sharing Agreement dated as of March 31, 1992, among
               Group and its subsidiaries (incorporated by reference from
               Media's Annual Report on Form 10-K for the year ended March
               30, 1992, filed as Exhibit 10.15, File No. 1-10784).(1)
*10.3      --  Employment Agreement dated as of November 22, 1995 between
               Media and Iain Calder (incorporated by reference from
               Media's Annual Report on Form 10-K for the year ended March
               25, 1996, filed as Exhibit 10.5, File No. 1-10784).
*10.4      --  Employment Agreement dated as of May 1, 1995 between Media
               and Anthony S. Hoyt (incorporated by reference from Media's
               Annual Report on Form 10-K for the year ended March 25,
               1996, filed as Exhibit 10.6, File No. 1-10784).
*10.5      --  Amendment dated as of November 11, 1996 to Employment
               Agreement dated November 22, 1995 between Media and Iain
               Calder (incorporated by reference from Media's Annual Report
               on Form 10-K for the year ended March 31, 1997, filed as
               Exhibit 10.6, File No. 1-10784).
 27        --  Financial Data Schedule (for SEC use only).
</TABLE>
 
---------------
 
 *  Incorporated herein by reference as indicated.
(1) Enquirer/Star, Inc. and GP Group, Inc. are now named American Media
    Operations, Inc. ("Operations"); Enquirer/Star Group, Inc. ("Group") is now
    named American Media, Inc. ("Media")
 
  3. Form 8-K
 
     No reports on Form 8-K were filed by the registrant during the last fiscal
quarter of the period covered by this report.
 
                                       26
<PAGE>   28
 
                                   SIGNATURES
 
     Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereto duly authorized, on June 19, 1997.
 
                                          AMERICAN MEDIA OPERATIONS, INC.
 
                                          By: /s/ PETER J. CALLAHAN
                                            ------------------------------------
                                                     Peter J. Callahan
                                            Chairman of the Board, President and
                                                  Chief Executive Officer
 
     Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities indicated on June 19, 1997.
 
<TABLE>
<CAPTION>
                      SIGNATURE                                              TITLE
                      ---------                                              -----
<C>                                                      <S>
 
                /s/ PETER J. CALLAHAN                    Chairman of the Board, President, Chief
-----------------------------------------------------      Executive Officer and Director (Principal
                  Peter J. Callahan                        Executive Officer)
 
               /s/ RICHARD W. PICKERT                    Senior Vice President and Chief Financial
-----------------------------------------------------      Officer (Principal Financial Officer)
                 Richard W. Pickert
 
                 /s/ PETER A. NELSON                     Vice President, Controller and Chief
-----------------------------------------------------      Accounting Officer (Principal Accounting
                   Peter A. Nelson                         Officer)
 
                   /s/ BARRY BAKER                       Director
-----------------------------------------------------
                     Barry Baker
 
               /s/ ANTHONY J. BOLLAND                    Director
-----------------------------------------------------
                 Anthony J. Bolland
 
                /s/ MICHAEL J. BOYLAN                    Director
-----------------------------------------------------
                  Michael J. Boylan
 
              /s/ ROY F. COPPEDGE, III                   Director
-----------------------------------------------------
                Roy F. Coppedge, III
 
                 /s/ STEVEN B. DODGE                     Director
-----------------------------------------------------
                   Steven B. Dodge
 
                 /s/ GERALD S. HOBBS                     Director
-----------------------------------------------------
                   Gerald S. Hobbs
 
               /s/ MAYNARD RABINOWITZ                    Director
-----------------------------------------------------
                 Maynard Rabinowitz
 
               /s/ GERRY M. RITTERMAN                    Director
-----------------------------------------------------
                 Gerry M. Ritterman
</TABLE>
 
                                       27